If you are an SME and didn’t save at least 25% on your HR costs in 2024, you need to read this.
So far, the 2020s have seen the rise of AI in the workplace, including many practical ways to save time (and money) when undertaking human resource activities.
How does AI save you money in HR? What can you do in 2025 to reduce your HR costs by 25%?
A 2023 report by Capterra showed that only one in five Australian SMEs uses AI in HR. This result is surprising, considering how much AI can simplify HR tasks. By automating repetitive work, analysing large datasets to uncover insights, and helping you make data-driven decisions, AI allows employees to focus on what they do best: the creative, human-centered tasks that no machine can replicate.
Only one in five Australian SMEs use AI in HR.
If you’re part of the 80 percent of Australian SMEs not yet using AI in HR, don’t worry—change doesn’t have to be overwhelming. Explore the list below to see where AI could save you time and resources in your HR activities. Start small, targeting areas where AI can deliver immediate, tangible benefits.
Recruitment
Writing job descriptions, specifications, and advertisements can be time-consuming. With a few well-crafted prompts, tools like ChatGPT can create high-quality, tailored job descriptions and ads for the platforms you want to use. It can even help you avoid discriminatory language, reducing the risk of direct or indirect recruitment discrimination.
AI can also simplify the selection process. Natural Language Processing (NLP) features in Candidate Management Systems can quickly match incoming resumes to the criteria outlined in your job ad, helping you focus on the most suitable candidates without hours of manual sorting.
When it’s time to interview, AI can generate a thoughtful list of questions that assess candidates’ knowledge, skills, values, and attributes. These questions can be designed to ensure fairness and inclusivity, avoiding unintentional biases. AI can even help you by providing examples of excellent, good, and poor answers to each question, guiding you through the evaluation process.
A robust Human Resource Information System (HRIS) can further streamline recruitment by drafting personalized Letters of Offer and Employment Contracts based on role-specific details and company policies. It can even notify you when a signed contract has been returned.
What AI can NOT do.
AI isn’t a replacement for intuition in hiring. Sometimes, the right candidate doesn’t have the most polished resume or doesn’t provide textbook-perfect answers during an interview. As a business owner, especially in an SME, you know your team’s dynamics better than any algorithm. Trust your instincts—they matter.
Additionally, while AI can assist with interviews, research shows that candidates perceive organizations using AI for video interviews as less attractive and less fair than those conducting human-led interviews. However, the same concern does not seem to apply to telephone interviews (Koechling et al., 2023).
Onboarding
AI can make onboarding smoother and more personalized. Your HRIS can set up custom welcome processes for new hires and recommend tailored training programs to help them get up to speed. It can track progress, provide updates on training outcomes, and ensure nothing is overlooked.
AI also shines in automating communications, like drafting introductory emails and sharing relevant information with the team, making your new hire’s first days more seamless.
What AI can not do.
AI may streamline onboarding, but it can’t replicate the warmth and connection of a human welcome. Starting a new job can be daunting, and nothing reassures a new employee more than a friendly face, regular check-ins, and personal encouragement. Studies show that HR chatbots can sometimes make employees feel uneasy, with concerns about the validity of AI-generated information (Kylliainen, 2024).
Performance Management
AI offers practical tools to streamline performance management for SMEs, providing insights that help managers focus on what matters most. By analysing employee data, AI can generate real-time performance summaries, track KPIs, and identify trends, enabling timely feedback rather than waiting for annual reviews. These insights make it easier for managers to address issues like disengagement or underperformance early.
AI also assists with personalized development by recommending training programs and skill-building exercises based on individual performance metrics and goals. It can automate reminders for regular check-ins, ensuring employees feel supported year-round. Additionally, AI reduces bias by focusing on measurable outputs, helping ensure fairer reviews.
Other applications include automated goal-setting tools, predictive analytics to identify retention risks, and pulse surveys for real-time employee feedback. AI’s ability to deliver clear, actionable insights empowers SMEs to create a performance management process that is both efficient and impactful.
What AI can not do.
AI cannot replace the human connection essential for effective performance management. Empathy, trust, and understanding context remain the manager’s role, ensuring that insights from AI are used thoughtfully to support employee growth.
Performance management should be a regular, ongoing process, of both good and bad feedback, not just an annual review. It should concentrate more on moving forward than looking backwards. AI, with its basis in past information, clearly has limitations here. And while AI could send a congratulatory message when an employee earns good feedback, research suggests that AI-generated feedback should be used as a complement to traditional feedback, rather than a replacement (Venter et al, 2024).
Employee Engagement
AI-powered tools like Attendance Tracking and Performance Appraisal software can be valuable in your employee engagement strategy. By analysing statistical and qualitative data, AI can help you measure the effectiveness of your efforts and identify areas for improvement.
AI can also enhance recognition programs. Employee Recognition software personalizes the way you celebrate success, while Rewards Program apps allow you to set up systems for 360-degree feedback and regular rewards. AI-powered survey tools also ensure anonymity for employees, encouraging honest responses when they provide feedback about their workplace.
What AI can not do.
Employee engagement is deeply personal, blending external rewards with intrinsic motivations and balancing positive and negative work experiences. AI tools can help with logistics, but they can’t replace the trust and connection that come from genuine human interaction. Additionally, employees may feel uneasy about AI’s potential to impact their roles, highlighting the importance of open, transparent communication about its use.
Exit Management
AI supports streamlining and enhancing the exit management process for SMEs, ensuring a smoother experience for both the departing employee and the organisation. By automating many of the administrative aspects, AI reduces the time and effort required to manage employee departures while also providing valuable insights to improve retention and reduce future turnover.
One key application here is in generating and managing exit documentation. HR systems powered by AI can automatically draft termination letters, calculate final payments, and ensure compliance with legal and policy requirements. These tools help minimise errors and ensure consistency, particularly in SMEs without dedicated HR specialists.
AI can also assist in conducting exit interviews. AI-powered survey tools can collect feedback from departing employees in a structured and anonymous format. Analysing this feedback with AI-driven sentiment analysis tools can reveal patterns in why employees leave, providing actionable insights to improve workplace culture, engagement, and retention.
In addition, AI can facilitate the offboarding process by managing access to systems and devices, ensuring a seamless handover of responsibilities, and tracking the return of company property. Automating these tasks reduces administrative burdens and helps maintain security during the transition.
What AI can not do.
While AI can handle many technical aspects of exit management, it cannot replicate the sensitivity and empathy that may be required when employee departures involve personal and emotional factors. A human touch is essential to leaving a positive impression and preserving relationships.
AI also struggles to fully capture the nuance of individual feedback during exit interviews. A manager’s ability to ask follow-up questions and interpret tone and context remains irreplaceable.
Take Control of your HR Costs Now.
HR may be a cost center, but right now it’s also your biggest opportunity to save money and boost efficiency with smart, scalable AI solutions. The time to act is now. Start with tools that deliver quick returns—those that automate repetitive tasks and reduce manual effort—and then expand to areas with longer-term benefits. Waiting could mean missed opportunities to cut costs and improve operations.
Feeling overwhelmed by the possibilities? Don’t let hesitation hold you back. Contact Bree Yardley at Staffr today to explore your options. Staffr specializes in uncovering cost-saving opportunities in HR and provides hands-on support to optimize your HR processes.
One critical area where Bree can assist is in crafting effective AI prompts. Without the right prompts, even the most advanced AI tools can deliver poor outcomes. Bree ensures you understand how to structure prompts—what to include, exclude, and emphasize—so your AI tools work effectively from day one.
If your budget doesn’t stretch to acquiring your own HR tech stack, Staffr has you covered. With our in-house AI capabilities, we deliver high-quality, data-driven HR services tailored to your needs. Don’t wait—let Staffr help you unlock the potential of AI in your HR processes today.
